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Thursday, March 22, 2012

Specialty care hospital tax break clears House

CONCORD – The potential for a multimillion- dollar state tax break to lure specialty care hospitals to New Hampshire cleared the House of Representatives on Wednesday.

The 198-161 vote for the controversial bill, HB 1642, came despite Health and Human Services Commissioner Nick Toumpas’ warning it could jeopardize the $200 million that the state receives by having all other hospitals pay a Medicaid Enhancement Tax.

The leadership team of House Speaker William O’Brien, R-Mont Vernon, put on a full court press for the bill, which aims to attract a Cancer Center of America destination specialty care hospital to Salem.

CCA has spent tens of thousands of dollars on lobbying and campaign contributions to win similar laws from lawmakers in Georgia and Pennsylvania.

No one in New Hampshire is registered to lobby for CCA, and company executives did not guarantee to a House committee that they would bring a center here if the bill became law.

A House committee voted against giving these 50-bed health care projects a Medicaid tax cut, but O’Brien championed a floor amendment to restore the tax break as long as the Obama administration would agree to it.

The amended bill would require that 65 percent of patients served in these centers would have to be out-of-state residents.

Rep. Tom Keane, R-Bow, said this makes sure the new center would not cherrypick patients from existing hospitals. And this would mean no more than 17 of the 50 beds would be filled with New Hampshire residents, he added.

“If 17 beds are the critical mass that destroy the essence of the hospital system in New Hampshire, then we truly are in trouble,” Keane said.

Rep. Rich DiPentima, D-Portsmouth, said this gives an unfair advantage to one facility whose owners could willfully ignore the out-of-state patient mandate.

“This amendment will create a special class of hospitals in New Hampshire,” DiPentima said.

Rep. Neal Kurk, R-Weare, said giving a state tax break to these centers could forego state revenue of up to $5 million a year.

Kurk was the first to warn publicly that the Obama administration could use this tax credit request to reopen the legality of New Hampshire’s Medicaid Enhancement Tax scheme.

“I say no; it’s not worth it,” Kurk said. “The feds are cracking down on this area, and we are opening ourselves to intense scrutiny.”

Rep. Steve Stepanek, R-Amherst, said these new centers would pay the state’s two main taxes on corporate profit and business activity along with substantial property taxes to the host community.

Many nonprofit hospitals do not pay corporate profit taxes to the state, he said.

“This request is entirely appropriate,” Stepanek said.

Toumpas wrote a letter to lawmakers urging them to reject a request for the tax credit as the reaction from the federal Centers for Medicare and Medicaid Services could financially harm the state budget.

“Should these regulations not be followed by virtue of a conflicted state law, the $200 million in state revenue as well as the entire federal matching funds from CMS provided in support of New Hampshire’s Medicaid Program, will be in jeopardy,” Toumpas warned.

The bill now heads to the state Senate, where it faces an uncertain future given that other hospital administrators are likely to crank up their opposition to it.

Kevin Landrigan can reached at 321-7040 or klandrigan@nashuatelegraph.com; also check out Kevin Landrigan (@KLandrigan) on Twitter and don’t forget The Telegraph’s new, interactive live feed at www.nashuatelegraph.com/topics/livefeed.